World Cup Strategy: A Lesson From History, Part 1

Now that world cup fever is truly beginning to take hold, I thought I would stoke the fires further by seeing whether traders might learn anything from the history of the competition.

The usual ‘health warning’ applies, in the sense that performance in the past is no guarantee of future performance, especially when we look back over a number of years.  Yet all World Cup competitions do hold some things in common, most obviously that it is a cup competition involving the best nations in world football over a comparatively short period of time.  In that sense perhaps the old adage that ‘anything can happen’ also holds true.  But are there any discernible patterns?

In this article I will look at what would have happened had you employed a favourite backing strategy involving laying off at the semi-final stage.  Although it has quite often been the case that a number of teams are expected to have a chance of winning, there usually emerges one team who are either marginal or clear favourites.

Let’s start with every England fan’s favourite tournament:

England 1966. Winner: England.   Brazil would have been massive favourites for this competition having won the preceding 2 tournaments in spectacular fashion.  Yet they got knocked out in the group stage.  Their performance was so bad in the tournament that to this day Pele refers to it as “Brazil’s disaster”.  Result of Strategy: YOU LOSE!

Mexico 1970.  Winner: Brazil. It may come as a surprise to some that many people regarded England as marginal favourites over Brazil.  Certainly there is now fairly wide agreement that the 1970 England squad was actually better than the one which won in 1966.  Of course this time it was England that fluffed their lines, throwing away a 2-0 lead to lose 3-2 to West Germany in extra-time of the Quarter Final.  The result was blamed by conspiracy theorists on the deliberate food poisoning of Gordon Banks who had to pull out shortly before the game, but either way this was a disaster and it’s possible to argue that England failed to qualify for 1974 partly as a result of the fall-out.   Result of Strategy: YOU LOSE!

West Germany 1974.  Winner: West Germany. West Germany came into this as European champions and were expected to do well.  Brazil were a pale shadow of the team that won in 1970.  In the end those that backed the home side would have been laughing all the way to the bank, though they did have a few wobbles on the way, notably when half the team almost quit over a wage dispute and when they promptly lost to their ‘other half’,  East Germany.  Result of Strategy: YOU WIN!

Argentina 1978.  Winner: Argentina. Although some were sceptical about the hosts ability to lift the trophy, they were certainly amongst the favourites, but it is fair to say that there were no stand out favourites with Italy and West Germany also expected to do well.  Given that no clear favourite existed for the tournament, it is quite likely that you would have backed one of the other teams, say Italy.  Even using Italy as our favourites, we would probably just about have profited.  Although there were no semi-finals, it was only clear in the last group game that they would fail to reach the final, so we will give this as a (marginal) success for the strategy. Result of Strategy: YOU WIN! (Narrowly).

Spain 1982.  Winners: Italy. Brazil and West Germany were the clear favourites, with both teams qualifying with a 100 per cent record.  The eventual winners, Italy, were not expected to do as well mainly due to the scandals that were rocking the domestic game: another illustration of how history repeats itself.  In the end the Azzuri developed a siege mentality that got them through the second round group game against what many considered easily the best team of the tournament, Brazil.  Had you backed West Germany you would have been successful as they made it through to the final. But for the sake of argument, we shall assume that it would have been much more likely for people to select the flair of the Brazilians as their favourites.    The tournament employed a rather strange format of 4 second round groups with the winners of each going through to the semi-final.  But the 3-2 victory by Italy over Brazil meant they failed to make it.  Result of Strategy: YOU LOSE!

In Part 2 we will look at the more recent touranaments to see if the strategy works.